India expands energy footprint in Bhutan with $450m credit line, new hydropower push

Prime Minister Narendra Modi expanded India’s energy partnership with Bhutan on Tuesday, announcing a 40 billion rupee ($455 million) line of credit and inaugurating a major hydroelectric power project during his visit to the Himalayan kingdom.

The outreach, part of India’s continued engagement with its neighbour, aims to strengthen bilateral cooperation and bolster New Delhi’s influence in a region where China has been stepping up its diplomatic presence and seeking to resolve its long-standing border dispute with Bhutan.

Modi, on a two-day visit to Bhutan, addressed a public gathering marking the birthday celebrations of King Jigme Khesar Namgyel Wangchuck’s father.

“The partnership of trust and development between India and Bhutan stands as a model for the entire region,” he said. “As both our countries progress rapidly, our energy partnership is further accelerating this growth.”

Later in the day, the prime minister inaugurated the India-funded 1,020-megawatt Punatsangchhu-II hydroelectric power project, which he said would increase Bhutan’s hydropower generating capacity by nearly 40 per cent.

The Punatsangchhu-II project is the fifth Indian-backed hydropower initiative in Bhutan. Together, these projects now generate nearly 3,000 megawatts of electricity. According to the Indian government, the new line of credit announced on Tuesday will help finance additional energy infrastructure in Bhutan.

Lok Nath Sharma, a former minister for energy in Bhutan, said the country plans to export surplus electricity to India after meeting its domestic demand, estimated at about 1,000 megawatts.

Several Indian private companies, including Tata Power, Adani Group, and Reliance Power, have signed agreements with Bhutan’s Druk Green Power Corporation to develop future hydropower projects, further deepening energy cooperation between the two countries.